Market bets show the probability of a cut in the deposit rate at the next policy meeting on July 21 have jumped to about 50 percent, from less than 20 percent. That rate is already at minus 0.4 percent.

Mr Plainview et al, forgive me if this has already been covered...In the event that the EU/ECB fail to keep the euro on the road over the next 5 years, and national currencies start to emerge again:

Will ECB, Germany & a few core countries cling to the Euro currency?

What would likely happen to your Irish mortgage debt - currently denominated in Euros? Would it switch to Punts/Sterling (whatever we align to) and therefore be reduced by inflation of our own currency value over long-term? (While being crippled with late 70s/80s style higher interest rates in short-term)Or would we dutifully cling to the Euro, be subject to lower inflation as Germany tries to keep a lid on it, but still hit with moderately higher ECB interest rates?

Any institution mapped out the likely outcomes & impacts of this on the average Irish mortgage holder?

Note: Obviously I'm excluding the Irish approach that everyone could just default on the mortgage and live 5-7 years payments free, then show up in court and get another year? While simultaneously going on a Joe Duffy "Cognitive Dissonance Special" to complain about higher mortgage rates...

Mr Plainview et al, forgive me if this has already been covered...In the event that the EU/ECB fail to keep the euro on the road over the next 5 years, and national currencies start to emerge again:

Will ECB, Germany & a few core countries cling to the Euro currency?

What would likely happen to your Irish mortgage debt - currently denominated in Euros? Would it switch to Punts/Sterling (whatever we align to) and therefore be reduced by inflation of our own currency value over long-term? (While being crippled with late 70s/80s style higher interest rates in short-term)Or would we dutifully cling to the Euro, be subject to lower inflation as Germany tries to keep a lid on it, but still hit with moderately higher ECB interest rates?

Any institution mapped out the likely outcomes & impacts of this on the average Irish mortgage holder?

Nobody really knows for certain but it's not too difficult to imagine what might happen.There are historic examples of pegs being removed and, essentially, the Euro is a currency peg. If you look at the Argentine Peso example, the government removed the convertibility of the Peso into US Dollars. That is what would likely initially happen with the Euro, Irish Euros would lose their convertibility into German Euros or French Euros. They would likely be redenominated into Punt Nua at that stage and we would be back to where we came from.

There would be a currency policy implemented, likely a range versus the GBP (or a basket of currencies) that we would commit to keep the Punt Nua held in. We would retake control of monetary policy - but that would naturally be limited by any new Peg range that was implemented (you inherit monetary policy from the currency you peg to).

There is no need for a peg of course, the Punt Nua would float well on the market - as the New Zealand Dollar does (a smaller economy than Ireland's).

However the real problem is that the existing national debt is denominated in Euros -- would that be redenominated to Punt Nua? It looks likely that Government debt would be redenominated into Punt Nua (at a one to one ratio) but large Corporate debt is likely to remain in Euros.... Those companies then have a liability mismatch where there debt is in Euro but their income is in Punt Nua.

My own expectation is that mortgages and deposits would both be redenominated into Punt Nua, meaning mortgage holders would "win" and deposit holders would "lose". I expect that the currency would weaken versus the Euro but not massively so, I know that forecasts for a New Greek Drachma were that it would half versus the Euro and I suspect Ireland would come in around the 75% to 80% mark. However, we run a large Trade surplus (€4bln per month) so this will support demand for our currency and I suspect it would actually strengthen quite quickly after float.

As I said, we would regain monetary control, so could set interest rates wherever we wanted them, hopefully there would be some sensible people involved who actually understand how interest rates work and would just leave them near a norm (relatively inline with the UK/Europe) and not mess around with them. We would then have full and free use of fiscal policy, as our currency would be fiat in nature, to balance our economy.

Ultimately, the Euro is a calamity and has been terribly managed (by the ideologically misguided Germans), which has all driven it to the point that it will likely fail -- Italy now favourite to tell the Germans where to stick their mercantilist machinations!

Nobody really knows for certain but it's not too difficult to imagine what might happen.There are historic examples of pegs being removed and, essentially, the Euro is a currency peg.

The euro is NOT a currency peg and was explicitly designed so that it can not be specifically to avoid the problems of its predecessor the ERM.

There is no such thing (legally or practically) as an 'Irish' euro or a 'German' euro. The concept of a SINGLE currency is explicitly set out in the EU Treaties (which have primacy over national law) as well as operationally in all of the systems of the ECB and participating central banks.

The euro will cease to be the legal tender of a participating member state in two circumstances: (a) Article 50-style leaving the EU; (b) messy and chaotic break-up of the EU itself.

Nobody really knows for certain but it's not too difficult to imagine what might happen.There are historic examples of pegs being removed and, essentially, the Euro is a currency peg.

The euro is NOT a currency peg and was explicitly designed so that it can not be specifically to avoid the problems of its predecessor the ERM.

There is no such thing (legally or practically) as an 'Irish' euro or a 'German' euro. The concept of a SINGLE currency is explicitly set out in the EU Treaties (which have primacy over national law) as well as operationally in all of the systems of the ECB and participating central banks.

The euro will cease to be the legal tender of a participating member state in two circumstances: (a) Article 50-style leaving the EU; (b) messy and chaotic break-up of the EU itself.

Yes, technically not a peg but functionally can be explained as a peg, particularly wrt any breakup;i.e. National central bank cannot create the currency - and you inherit monetary regime on the currency from an external Central Bank;Yes today there is no difference between and Irish Euro and a French Euro (though they do have a different and identifying serial number prefix) but on breakup there would be a difference -- that's the point I'm making regarding convertibility -- a breakup is essentially the removal of the convertibility of an Irish Euro for any other Euro.

Yes. Monetary policy is effective when the credit channel and other channels in the transmission of monetary policy are not impaired and work well. What the ECB wants to achieve is credit channels working in all countries.

But it does not work in all countries. It is hampered in those countries where the deleveraging process is not sufficiently advanced. And the [share of] non-performing loans (NPLs) is still very high. NPLs are a very, very severe burden on balance sheets, which hamper the ability of banks to provide credit. As long as this is the case, there is a risk that monetary policy becomes ineffective.

The refinancing of governments is cheaper now, it's better now, ensuring the solvency of countries. Maybe this is the main objective of the ECB, but it has communicated [that its objective] is to fight deflation. Now they say there is no deflationary risk anymore but inflation is still too low for too long and 'we have to use whatever is in our toolkit and maybe invent something new in our toolkit to do this'. And if this is not sufficient then they choose to do more of the same for longer.

_________________The real damage is done by those millions who want to 'get by'. The ordinary men who just want to be left in peace. Those who don’t want their lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what?Sophie Scholl

_________________The real damage is done by those millions who want to 'get by'. The ordinary men who just want to be left in peace. Those who don’t want their lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what?Sophie Scholl